By Dr. Jan Yves Remy and Chelcee Brathwaite
On the side lines of the UNCTAD XV Conference hosted by Barbados on 3-7 October 2021, a growing courtship between Barbados’ Prime Minister Mia Mottley and Kenya’s President Uhuru Kenyatta was entering a new phase. While trade officials were busy negotiating the final text of the Bridgetown Covenant at the UNCTAD XV plenary session, Barbados was also playing host to a high-level Kenyan contingent of officials and business persons at a Kenya-Barbados Business Forum. The Forum was organized for the Kenyans and their Barbadian counterparts to exchange best practices and consider business opportunities in the fields of finance and investment; telecommunications and digitization; travel and tourism; energy; transportation and logistics; and biotechnology and bio trade. The Forum appears to have been successful and culminated in the signing of three agreements: an Air Services Agreement; a Memorandum of Understanding (MOU) in the Establishment of a Joint Committee on Trade and Investment; and an MOU in the Development of the National Botanical Garden. In this SRC Trading Thoughts we explore what business and trade opportunities might truly lie in the growing ties between Barbados and Kenya.
Existing Trade Between Barbados & Kenya
Current trade between Barbados and Kenya is sparse and undiversified. According to the International Trade Centre’s (ITC) Trade Map, Barbados’ total merchandise trade with Kenya in 2020 was only US$ 69,000 – accounting for a mere 0.004% of its global trade – with imports predominantly in textiles and women’s clothing and exports of an unspecified nature. Trade in services between the two countries could not be quantified.
From this poor baseline, opportunities exist for realizing export growth and diversification on both sides. According to the ITC’s Export Potential Map, rum, printed paper(-board) labels, and undenatured ethyl alcohol are the products with greatest export potential from Barbados to Kenya; while for Kenya, exports with the greatest potential to Barbados could include black tea (packings >3kg), goat meat, and pineapples (prepared or preserved). In terms of export diversification, ITC’s Export Potential Map found crude palm oil; palm oil (excl. crude) and fractions; and mixtures of odoriferous substances used in food and drink to be Barbados’ best options for export diversification in Kenya; while prepared or preserved tunas, oranges, fresh or dried and broken rice are Kenya’s best options for export diversification in Barbados.
Possibilities for Trade in New Innovative Areas
Apart from traditional merchandise trade, there is also potential for growth in innovative fields like biotechnology and bio trade, renewable energy, and digital payments. And Kenya came to the Forum well represented.
Given the recent strides Kenya has made in the fields of agricultural biotech and biotrade, it was no surprise that a representative from Kenya Plant Health Inspectorate Service was part of the contingent visiting Barbados. Market Data Forecast valued the global agricultural biotechnology market at US$ 39.7 billion in 2021, with projections to reach US$ 66.7 billion by 2026. According to the US Department of Agriculture 2020 Report on Agricultural Biotechnology in Kenya, the first commercial planting of Bt cotton, a genetically-modified pest resistant cotton variety, began in March 2020. Research trials for genetically engineered cassava are complete and research for bacteria wilt-resistant bananas and virus-resistant sweet potato are ongoing. Kenya is also undertaking animal biotechnology research to develop vaccines, disease diagnostic test kits and trypanosome-resistant cattle, though still in early development stages. There is tremendous scope for collaboration here, given the similar challenges faced in Barbados as it relates to crop yield losses due to pest and climate change factors, as well as in the field of animal care.
Another big area is renewable energy. Present at the Forum was Kenya Electricity Generating Company (Ken Gen), the leading electric power generating company in East Africa boasting a generation mix comprising geothermal (39.2%), hydro (45.3%), wind (1.4%) and thermal (14.1%). Barbados recently submitted updated climate mitigation plans to the United Nations which included a 95% share of renewable energy in the electricity mix by 2030. Considering that over 85% of Ken Gen’s installed capacity is renewable, there is significant scope for collaboration to meet renewable energy targets. Additionally, in 2019, Kenya received global recognition for launching Lake Turkana Wind Power Farm, the largest wind power plant in Africa. Despite Barbados’ small size, it is surrounded by large oceans which creates opportunities for offshore wind power plants and ocean tide power generation which renewable energy service providers like Ken Gen can consider investing in.
Also present at the Business Forum was Kenyan mobile network operator, Safaricom PLC, best known for its M-Pesa. Since its launch in 2007, M-Pesa has become one of the world’s most successful mobile-payments service, with over 50 million active users across Africa. Created at a time when mobile payments services were still in infancy stages especially in developing countries, various factors contributed to M-Pesa’s success, including its use of technology, simplicity, widely accessible distribution system and sound partnerships with banks and the Kenyan Central Bank. M-Pesa Global, a new product, now allows registered customers to send and receive money globally. Recognising the ongoing payments systems challenge across the Caribbean, fruitful exchanges on best practices were hopefully had between M-Pesa and Barbadian financial regulators.
Facilitating Stronger Transport & Logistic Links
While the increase in digital technologies will open up some possibilities for commerce, Barbados and Kenya will still need to develop their transportation and logistical links to take full advantage of the potential offered under the signed MOUs. Apart from enabling the goods trade, better transportation networks will allow for freer movement of persons and services. During the pandemic, for instance, many Ghanaian nurses moved to Barbados to provide specialised care, and there is no reason to believe this arrangement could not be also extended to other countries like Kenya. Moreover, since 2018 international tourism arrivals in Kenya grew by 3.9% from 2.02 million tourists to 2.05 million in 2019; similarly Barbados enjoyed three consecutive years of growth in stayover arrivals, welcoming over 680,269 stayover visitors and 614,933 cruise passengers in 2018 according to the BTMI’s latest annual report. Of course since the pandemic the global tourism industry has suffered a massive economic fallout. However, as recovery begins with distinct products and given the historical ties between the two countries, it seems worthwhile for the two countries to promote greater travel to each other’s destinations.
At present, there are no direct flights connecting Barbados and Kenya, or even the Caribbean and Africa. The Air Services Agreement will hopefully usher in a new era for transport and travel and it augured well that two major African logistics service providers. Kenya Airways and Express Shipping and Logistics Limited were also present at the Business Forum. Collaboration with these companies could soon see direct flights and shipping services between Barbados and Kenya, and the elimination of in-transit third-party visa requirements which complicate the connection process.
In the past year, CARICOM has increased its direct collaboration with the African continent, through joint action in procuring COVID-19 vaccines, and most recently through the hosting of the first Africa- CARICOM Summit held virtually on 7 September 2021. Although there was always a Pan-African spirit connecting the two regions, and an obvious affinity due to cultural and historical ties, African and CARICOM leaders had not moved beyond rhetoric to creating direct trade and investment relations for the growth of business opportunities.
Through PM Mottley and President Kenyatta, we have two leaders committed to developing concrete and sustainable trade relationships with each other, which could lead to further relations between CARICOM and Africa, through the African Continental Free Trade Agreement. And as the SRC has demonstrated through its Caribbean-Africa Trade Webinar Series earlier this year, there are many opportunities to learn from each other. Through the convening of the Business Forum to exchange best practices and discuss the potential for collaboration in key innovative and dynamic sectors, Barbados and Kenya may well pave the way for others to follow.
Dr. Jan Yves Remy and Ms. Chelcee Brathwaite are, respectively, Director and Trade Researcher at the Shridath Ramphal Centre for International Trade Law, Policy and Services of the University of the West Indies’ Cave Hill Campus (Barbados).